Better Way To Price

[chas]

Have a domestic open market for all grains and oilseeds to add value and competition to export for Western Canada.
Have farmer controlled CWB for export of all grains and oilseeds in CANADA.
All exporting countries to adopt the above system to cooperatively establish stable prices and supply on international markets. Need help from WTO for this.
Question could each country than subsidize their farmers if need be if they had to subidize each commodity equally to avoid over production in anyone commodity.
Question would the value added domestic open market than push the export price for the single desk seller.
Help me boys. I think my thinker has information over load caused by not going to Arizona this winter. Chas

[TOM4CWB]

The Canola crushers must be paying you to say this Chas!

They would like nothing more than a CWB system to always hold stocks for them, with no carrying charges!

This is what in effect the CWB does for the whole domestic feed grain consuming sector now.

Do you want to get even poorer Chas?

[parsley]

Chas, you want to get subsidies? Good old Chretien as a business partner! Good grief.
Parsley

[chas]

Tom$cwb: The CWB will not be allowed to sell into the domestic market. They will not hold stocks or pay carrying charges for anyone in the domestic market. They won't let us export so we won't let them sell in to the domestic market. Does this help clairify my statement.
Parsley: Subsidizes appear to be a fact of life not only in farming but in most other businesses around the world. I'am looking for away that would create a leveler playing field. Very country has a different bottom line in agriculture and business and politics are build on subsidies. Can I buy your vote. Chas

[parsley]

1."Subsidizes appear to be a fact of life not only in farming but in most other
businesses around the world".

True. But it produces unintended negative consequences, it is not in Western interests and it's not sustainable. Therefore, correct it, and rebuild.

2. " Can I buy your vote?"

It wasn't listed for sale Chas.

[chas]

Parsley: I quest you have never voted.
How do we do away with subidies if we don"t change the way the world markets its grain and oilseed. Want to see what open market does for USA farmers go to www.harestofrisk.com.

Was there any thing you liked in my opening statement. Try to be positive Parsley. Chas

[TOM4CWB]

The CWB for a monopoly export market on Canola would cost 10-20% of discounts to what we can get from the market today!

I hope this was not what you had in mind, was it?

[parsley]

"Have a domestic open market for all grains and oilseeds to add value and
competition to export for Western Canada. "

Dandy, Chas, dandy. A good solid pillar to build on. Nobody is forced. Competitive. Thank you.

Your penpal, Parsley

[chas]

Tom4cwb: I believe over a five year period we would gain on average a 20% bonus. Read the next line that all exporting countries develop similiar exporting agencies so some cooperation could be developed on world trade in agricultural products. You may not get a premium every time but it could turn into a more stable pricing system. I'am trying to vision a marketing system that the seller could gain some power away from the buyer.
Parsley I told you, you could be positive. Now the open domestic market should create value added for Western Canada slowly pushing our price up as it develops. If the processor is here freight and handling charges should be reduced. Remember that is what removing the crow rate subsidy was going to do right. Wrong we needed to go one step further domestic open market. This would only take 2.5 million tonnes of wheat and maybe the same amount of barley( not sure about barley) away from the CWB. They would gain in export canola tonage. Farmers would gain in a more competitive domestic value added market in Western Canada.
Exports have to be done on more of a cooperative basis with other countries then we are obtaining through the free market. Customers are not always right, sometimes they need a reality check just like the seller is getting most of the time in farming. Chas

[chaffmeister]

Chas:
On what basis do you see that, if the CWB were to control the Canadian canola market, "over a five year period we would gain on average a 20% bonus."?

How would the CWB improve prices in the canola market? The canola crushers would demand the same treatment as the Canadian wheat millers - parity with the U.S. Anything else would weaken the whole industry to the point that they would close their doors. (And don't think they wouldn't do it. ADM and Cargill have been known to dismantle plants and move the equipment elsewhere.) On the export side, if the CWB were involved in canola and tried to extract a premium price, Japan, China and Mexico would simply buy from Australia, the EU and the U.S. (the U.S. now has exportable surpluses of canola).

Would the CWB be able to "market" canola any better than the private trade? Not likely. The relationships are in place and like any other business, you deal with who you know and trust.

Could the CWB give you a better price? How? They can't get any premiums out of the market, they would be charged a handling tariff by the grain companies, plus the CWB would have it's own costs to add on. What value would they bring?

I read the next line (as you ask) which states that "all exporting countries develop similiar exporting agencies so some cooperation could be developed on world trade in agricultural products".

At the risk of sounding negative, how are you going to pull this off? How are you going to feel down on the farm near Camrose when your agency is telling you that the price is fixed where you believe it is profitable to grwo wheat, but because a number of importing countries are now self-sufficient, Canada's exports are going to drop materially (high prices will do that - they can now grow it cheaper than it costs to import it). So now, you're going broke because, although the fixed price is right, you have minimal sales. Can this happen? And what about the "moral hazard" of some of your "partners" in the cartel, stepping away from it when it is in their best interests to supply a "strategic" country in vital need? And how do you stop them from bundling the wheat or canola sale (at the set price, so as not to violate the cartel) with trade in textiles, cars, oil or steel - etc etc. You can set prices all you like - the truth of the matter is that price is not that important in the grand scheme of things. (I am assuming, as I hope you are too, that no government in the world is going to allow their farm community full autonomy when it comes to trade in food.)

Negative? No - pragmatic.

You also say "If the processor is here freight and handling charges should be reduced. Remember that is what removing the crow rate subsidy was going to do right. Wrong we needed to go one step further domestic open market."

Freight and handling become a "non-issue" when exports become a non-issue. As long as you are still exporting, the export price (freight and handling included) will have an influence on price. For example, feed barley. For the most part, the CWB (export) price has little influence on the domestic price of barley. Freight and handling means very little to that market.

Look at canola. Now that we crush about as much as we export, there are times (not this year) when the crusher needs to step up to the plate and pay above export parity to ensure he gets his supply. It's not happening this year because he doesn't need to with all the carry over stocks in canola out there. If you think that the canola crusher (or any other processor) is going to pay you more than what you can get elsewhere, you are sadly mistaken. If you want a thriving, competitive processing industry, make sure there is nothing in the way of them paying no more than the "market" for their inputs, and getting no less than the market for their products.

If you want to take greater control over what you produce to raise the price, good luck. A better way would be to get every farmer in Western Canada to buy out ADM and ConAgra (both publicly traded companies). Might as well go for CanAmera Foods, MapleLeaf Foods, etc. You won't be able to raise the price of wheat (or canola), but you'll be able to share in the true value of what you produce.

[freebird]

Excellent analysis, chaffmeister. To pick up on your last point - this whole idea that commodity prices are too low - that is an entirely subjective opinion. For example, western Canada may be worse off without U.S. subsidies because then they would be growing far more pulse crops, which is what is driving our economy at least here in SW Sask.

Commodity prices are irrelevent to the health of the farming industry - land values will simply adjust downward when commodity prices fall. The only reason a farmer would want high prices is if he was interested in selling his land. I can remember in the early '80's wishing that wheat prices would fall. Why? Because I didn't have much land and needed to expand.

If you are not doing well farming now, it's not prices that are at fault, it's inefficiency - most times caused by the farming operation not being large enough to be feasible - and if your farm isn't big enough now, the last thing you want is high prices that will drive up land values.

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[ianben]

Hi cm and fb
I am sorry to have to say this ,but to say that commodity prices have nothing to do with the health of farming is bullshit.
It is an insult to the good farmers who through no fault of their own drought or flood, BSE or now foot and mouth, in England. Find themselves financially exposed when prices are low.

Just pray it does not happen to you.

26000 UK farmers have left the industry in 2000. They were not all bad farmers some were big and efficient. One was the biggest pig producer in UK. When you are making a loss the bigger you are the bigger the loss!!
I still maintain the family farm worldwide is unsustainable at present prices.
we need to put a bottom in the market.
Linking wheat to energy prices by marketing wheat as fuel might do this.
If wheat for fuel is worth 50% more than wheat for food why are we arguing? We should be out trying to sell it.
Regards Ian

[chaffmeister]

Please allow me to be very clear on this issue of price. My comment was:
"You can set prices all you like - the truth of the matter is that price is not that important in the grand scheme of things."

Please don't take my comment out of context. Price is only one issue and can be dwarfed when other "marketing" issues become part of the mix. TO put what I was saying in other words, you won't necessarily keep your business on price alone.

With respect to comments made by other writers, it's really not my place to explain what they meant - I'll leave it up to them. But I will say that price received by producers is very important - isn't the fact that most of these threads are about getting the best prices indicative of that?

cm

[TOM4CWB]

I believe that the management on a farm has control over 2 risks.

1. the control over spending too much on inputs;

2. the control over spreading risk to other risk takers in the economic community, that wish to share this risk with my farm.

If these two tools are used in tandem, most any farm is profitable, over a 5 year period.

Think long term, think positive.

These two thoughts are 90% of the secret of farming!

[chas]

Well freedom fighters you sure ripped that theory all to hell.
Do you suppose farms would be as big as they are today if someone would of had some foresight into stablizing prices and supplies to some sustainable level.
What is a sustainable price, well I quess subsidies try to answer that question.
Remember the land won't break you but machinery and cutting crop input will.
Tom4cwb where is that guy that will take on some of my risk without me bending over backwards.
For a farmer to do well another farmer has to have bad luck. Sounds fair to me. Let the country with the most money win. We can price our way right into the poor house. Chas